Spring Market Slow to Bloom in 2025: How Economic Uncertainty Is Reshaping Canadian Real Estate

The spring real estate market in Canada is traditionally the busiest season of the year. It’s a time when sellers list homes in anticipation of warmer weather and greater buyer engagement, and when buyers re-enter the market with fresh mortgage pre-approvals and renewed urgency to close before summer. But in 2025, that pattern shifted.

This year, the spring market across major Canadian metros such as Toronto, Vancouver, and even Montreal took longer than usual to take flight. Rising political tensions, global trade uncertainties, a looming federal election, and cautious monetary policy combined to keep many prospective homebuyers on the sidelines well into June.

In this in-depth blog, we’ll explore:

• What happened to Canada’s 2025 spring market

• How national and regional price trends evolved in Q2

• Key factors behind buyer hesitation

• Market-by-market analysis including Toronto, Vancouver, and Montreal

• What renters are thinking—and how it’s affecting demand

• The outlook for Q3 and Q4

• Strategic insights for investors, homeowners, and renters navigating uncertainty

The 2025 Spring Market: A Season on Hold

Buyer Caution Reigns

The start of spring 2025 did not bring the usual surge in activity. Instead, buyers across Canada hit the brakes. Many cited political and economic uncertainty as their reason for delay. Others referenced interest rate concerns and affordability challenges as justification for pausing their home search.

While interest rates remained unchanged—holding at 2.75% for much of Q2—broader economic uncertainty left Canadians nervous. A federal election campaign, global tariff disruptions, and international conflict shaped a media narrative of caution. Consumers responded with inertia.

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Sellers Still Showing Up

Interestingly, this didn’t deter sellers. Active listings across most major metros increased quarter-over-quarter, creating a growing inventory base. Sellers, motivated by long-term planning or life circumstances, proceeded to list despite the quiet buyer environment.

The result? A mismatch between supply and demand. Inventory grew, but buyers didn’t show up in expected numbers—at least not until late Q2.

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Home Prices: Flat Nationally, Mixed Regionally

National Market Snapshot

• Aggregate home price in Canada (Q2 2025): $826,400

• YoY growth: +0.3%

• QoQ change: -0.4%

Price movement at the national level was modest. Detached homes showed slight year-over-year growth (+1.1%) to $870,200, while condominiums saw a decline (-0.8%) to $592,000. Quarter-over-quarter trends were largely flat.

The absence of a strong spring surge suggests continued consumer caution but also hints at a potential build-up of pent-up demand for the coming quarters.

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Key Factors Impacting the Market

1. Monetary Policy in a Holding Pattern

The Bank of Canada’s decision to hold its overnight lending rate steady at 2.75%—despite inflation coming under control—was a calculated move. Policymakers cited uncertainty surrounding U.S. trade policies and global markets as rationale for holding rates steady.

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For homebuyers, stable rates offered some clarity. However, the expectation of future cuts led many to adopt a wait-and-see strategy, anticipating better affordability in the second half of the year.

2. Rising Rental Costs vs. Ownership Hesitation

While housing prices stabilized, rental costs in most urban centres continued climbing. This presented a paradox: ownership costs were plateauing, but would-be buyers chose to stay in the rental market, contributing to rising demand and higher rents.

Why the disconnect? A national survey showed:

• 40% of renters said they were waiting for home prices to fall

• 29% wanted interest rates to drop further

• 28% cited the need to save for a larger down payment

The renter mindset reveals cautious optimism, mixed with short-term financial restraint.

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3. Inventory Accumulation Creating Buyer Opportunity

Sellers continued to list, despite muted buyer demand. This is leading to more balanced market conditions in cities previously defined by extreme seller advantages.

Buyers who act decisively in late summer or early fall may find themselves in a favorable position to negotiate—particularly in high-inventory areas of Ontario and British Columbia.

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Regional Market Analysis: How Key Cities Performed in Q2

Toronto (GTA): Buyer Caution Easing by June

• Aggregate price change (YoY): -3.0%

• Inventory: Rising through April and May

• Activity Trend: Sharp pickup in June

Toronto’s spring market began tepidly. Affordability concerns, compounded by election noise and global tensions, kept many buyers sidelined. However, a marked shift occurred in mid-May, with buyer engagement increasing and bidding activity reappearing in select neighborhoods.

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Notable trends:

• Increased activity in suburban markets like Oshawa, Milton, and Newmarket

• Condos showing resilience in transit-connected downtown corridors

• First-time buyers seeking smaller units to enter the market sooner

While prices are down year-over-year, price stabilization and robust rental demand are prompting investors to re-enter cautiously.

Vancouver (GVA): Still Stabilizing

• Aggregate price change (YoY): -2.6%

• Buyer psychology: Highly cautious

• Sales activity: Stabilized in June

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Vancouver continued its corrective trend into Q2. Rising listings, particularly in luxury and downtown segments, are keeping prices soft. Investors remain wary due to:

• Ongoing tax implications (empty home tax, speculation tax)

• Regulatory pressure on short-term rentals

• Limited upward movement in rents

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However, by June, buyer activity began to stabilize, hinting that Vancouver may have found its price floor.

Montreal: The Standout Performer

• Aggregate price change (YoY): +3.5%

• Momentum: Consistent, fueled by affordability and strong fundamentals

Montreal outperformed other major metros in Q2. It offered a combination of affordability, population growth, and strong local employment, helping maintain housing demand even as other cities cooled.

Quebec City was especially impressive, posting 13.5% price growth YoY—its fifth consecutive quarter of national leadership.

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National Trends and Forecasts

Which Markets Are Rising?

Out of 64 markets analyzed nationally:

• 38 saw flat or rising prices

• 26 experienced year-over-year price declines

• The majority of declining markets are in Ontario

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Year-End Forecast

Royal LePage has revised its year-end 2025 forecast modestly. Prices are now expected to increase by 3.5% YoY in Q4 2025, reflecting cautious optimism and anticipated demand recovery.

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Renters: Ready but Waiting

Canada’s rental market remains tight, yet the desire to transition into ownership is high. Many renters are actively saving, watching prices, and waiting for:

• Further interest rate reductions

• Strong employment confirmation

• Political and global stability

Their decision to hold off has slowed first-time buyer activity, contributing to the spring slowdown—but it also points to a strong buyer wave once confidence returns.

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Outlook: Late Surge or Delayed Recovery?

What Q3 Could Bring

With interest rates stable and economic indicators improving (notably, June’s strong employment report), buyer confidence is likely to return in Q3. That could result in:

• A late spring surge effect extending into summer

• More competitive offers on quality listings

• Gradual upward price pressure, especially on entry-level homes

What to Watch in Q4

As the federal election nears, economic policy clarity and monetary cues from the Bank of Canada will shape buyer behavior. If confidence solidifies:

• Sales volumes could rise 8–12%

• Year-end price growth may surpass current forecasts

• Inventory levels may normalize, reducing pressure on buyers

Strategic Takeaways for Stakeholders

For Homebuyers

• Act sooner rather than later: The window for negotiating price and incentives may narrow by fall

• Secure rate holds now: Many lenders offer 90–120 day pre-approvals

• Focus on value neighborhoods: Transit-connected suburbs and smaller urban centres offer better deals

For Sellers

• Stage and price strategically: Buyers remain cautious—price transparency and presentation matter

• Expect longer timelines: Some listings may take 30–60+ days to sell, especially at higher price points

• Highlight unique features: Outdoor space, energy efficiency, and modern finishes can tip the scale

For Investors

• Watch rental yield compression: As rents peak and prices rise again, returns may narrow

• Target stable-growth regions: Markets like Montreal and Halifax offer affordability and momentum

• Prepare for long-term holds: Quick flips are harder; focus on cash flow and equity building

For Renters

• Save aggressively during this period of ownership pause

• Monitor market data monthly and subscribe to real-time alerts

• Partner with a mortgage broker early to understand eligibility and grant options

Conclusion: Spring Delayed, Not Derailed

The 2025 spring housing market in Canada arrived late—but not without promise. Economic uncertainty may have delayed homebuyers, but signs of renewed confidence are already visible. With rising employment, steady borrowing costs, and motivated sellers, the second half of the year may offer better conditions than expected.

Markets like Montreal and Quebec City continue to outshine, while Toronto and Vancouver recalibrate. This highlights a truth that will define Canadian real estate in 2025 and beyond: Canada is a country of many markets, and success lies in understanding each one’s unique rhythm.

Whether you’re buying, selling, renting, or investing—watch the data, trust fundamentals, and stay agile. The recovery may be slower this time, but it’s already underway.